Cisco in US$7bn cable television move

21 Nov 2005

One of the world’s largest network equipment makers Cisco has acquired a cable television technology company Scientific-Atlanta for US$6.9bn in a move designed to optimise the company’s participation in the forthcoming realms of triple and quad-play digital entertainment.

Scientific-Atlanta is a global provider of set-top boxes, end-to-end video distribution networks and video system integration. The combined entity creates a world class, end-to-end triple-play solution for carrier networks and the digital home.

Under the terms of the agreement, Cisco will pay US$43 per share in cash in exchange for each share of Scientific-Atlanta, and assume outstanding options, for an aggregate purchase price of approximately US$6.9bn, or approximately US$5.3bn net of Scientific-Atlanta’s existing cash balance. The transaction is expected to close in the third quarter of Cisco’s fiscal year 2006.

“Video is emerging as the key strategic application in the service provider triple-play bundle of consumer entertainment, communication and online services,” said John Chambers, president and chief executive officer of Cisco Systems.

“The combination of Cisco and Scientific-Atlanta brings unmatched experience and innovation in delivering large scale video systems and networks, and the addition of Scientific-Atlanta further extends Cisco’s commitment to and leadership in the service provider market. Moreover, Cisco’s international presence and internet protocol leadership will also create strategic synergies that accelerate the combined growth opportunity.”

Chambers continued: “As consumers demand more sophisticated information and entertainment services in their home, tightly coupled applications, devices and networks will be essential. The collective strength of Linksys and Scientific-Atlanta will extend Cisco’s leadership position across the entire networked digital home.”

When the transaction closes, Scientific-Atlanta will become a division of Cisco’s Routing and Service Provider Technology Group.

By John Kennedy